News Analysis – July 2015

General News Summary

Report, Resolution Criticized

Israel has called the United Nations Human Rights Council resolution condemning it over last year’s Operation Protective Edge in Gaza “hypocritical. The vote was supported by 41 countries, the United States was the only country to vote against and five nations — India, Kenya, Ethiopia, Paraguay and Macedonia — abstained. India’s abstention reflects the significant warming in New Delhi’s relations with Israel since the 2014 election of Prime Minister Narendra Modi.

Prime Minister Benjamin Netanyahu has led Israeli criticism of the UNHRC report on which the resolution was based, calling it “biased” and saying that “the commission that wrote it is under a committee that does everything but protect human rights.” Netanyahu said: “Israel defends itself according to international law and we are not the only ones to say so.”

The UN Human Rights Council report on the 2014 Gaza conflict, released in late June, said that both the Israeli Defense Forces and Hamas may have been guilty of war crimes. The report accepted the Palestinian death count, which estimated that 65 percent of those killed in the fighting were civilians; Israel says it has confirmed that 44 percent of Palestinian casualties were combatants. The report also enumerated more than 6,000 Israeli airstrikes, 14,500 tank shells and 45,000 artillery shells unleashed between July 7 and August 26, while the Palestinians launched 4,881 rockets and 1,753 mortar shells and launched attacks on Israel via tunnels built under the border areas.

According to some reports, Netanyahu is considering withdrawing from the UNHRC, which he called a “hypocritical committee”.

Border Reinforcements

The Israel Defense Forces have stepped up its presence along the Israeli-Egyptian border in the wake of attacks by an IS-affiliated group on Egyptian forces in the Sinai Peninsula. According to various reports, Israel is also prepared to grant an Egyptian request to increase its forces in northern Sinai beyond those stipulated in the Egyptian-Israeli peace agreement — if such a request is made. Israel’s relations with Egypt have been on the upswing since President Abdel Fattah al-Sisi came into power; Egyptian leader and Prime Minister Benjamin Netanyahu reportedly maintain a discreet relationship. After 17 Egyptian soldiers were killed late-June clashes in and near the town of Sheikh Zuweid, Netanyahu hinted at that relationship when he said, “We are partners with the Egyptians, and many other states in the Middle East and the world, in our battle against radical Islamic terrorism.”

Israel is particularly concerned that Wilayat Sinai (Islamic State’s branch in Sinai) may be attempting to replicate the IS war model in Syria and Iraq — an effort to take over an entire city, establish an IS regime in it, and expand the control in a short time over additional regions and villages. And one Israeli military source was quoted in an Egyptian newspaper as saying there is evidence that Wilayat Sinai got logistical help, and advanced weapons, from Hamas in Gaza.

Haaretz said that if Islamic State comes near Gaza, Sissi might “invite” the Israel Defense Forces to act against it, an act, which would not be seen as an Israeli breach of Egypt’s sovereignty, because Gaza falls under Israel’s responsibility.

Flotilla Stopped

Commandos from the Israel Navy’s elite Shayetet (Flotilla) 13 commando unit in late June boarded and took over the Marianne, lead ship in a four-vessel convoy headed for Gaza. The ship was towed to Ashdod port, where pro-Palestinian activists, including the former president of Tunisia, were detained and deported. One member of an Arab party in Israel’s Knesset was also aboard the ship.

The takeover was quiet. Three other members of the Gaza-bound “peace convoy” turned back. Prime Minister Benjamin Netanyahu said that the flotilla was “nothing but a display of hypocrisy and lies, which only helps the terrorist organization Hamas and ignores all the atrocities in our region.”

A search of the Marianne, which ostensibly was carrying a cargo humanitarian aid, disclosed only two relatively small packages — a solar panel and a medical inhaler.

Ex-Envoy Raises Furor

Michael Oren, the former Israeli ambassador to Washington, has stirred new controversy over the fragile state of relations between Israel and the United States, and between the two countries’ leaders, in a new book about his experiences in the U.S. capital. In “Ally, My Journey Across the American -Israeli Divide,” the noted historian and now Knesset member in Moshe Kahlon’s Kulanu party, says that President Obama’s efforts to move closer to the Muslim world were influenced by the fact that his Kenyan father was a Muslim, and that, among other things, adopted the Arab narrative in suggesting that Israel was founded because of the Holocaust and violated a long-standing agreement with Israel that there would be “no surprises” in changed U.S. policy. Publication of the books and of several articles by Oren published in U.S. newspapers has drawn angry responses from the White House. In Israel, Kahlon distanced himself and the Kulanu party from Oren’s remarks, while Prime Minister Netanyahu declined to do so. Answering suggestions that he wrote the book to make money, Oren says one of his principal reasons was to alert the world to the existential threat on Israel created by Obama’s Iran policy.

Iran Warning

Signing of the nuclear deal now in its final stages of negotiation would empower Iran into a position where “no one will be able to threaten it and it can do whatever it pleases,” according to a top Israel security official. Ram Ben Barak, director general of the Strategic Affairs Ministry who has been mentioned as a leading candidate to succeed Tamir Pardo as head of the Mossad intelligence agency, told the right-wing Israeli Makor Rishon newspaper that “a better agreement could be achieved” if the Americans insisted. “There is no doubt that a good deal is preferable to war…But a bad deal can have really serious implications.” Among other things, he said that a nuclear Iran would prompt other Mideastern states into a nuclear weapons arms race.

Prime Minister Netanyahu said that what has been regarded as progress in the Vienna talks should be seen as a “breakdown” and not a “breakthrough,” with the world powers conceding more every day. He said the deal with Iran was worse than one signed with North Korea, which led to Pyongyang obtaining an arsenal of nuclear weapons.

PM’s Staff Appointments

Prime Minister Benjamin Netanyahu has made a number of new appointments in Prime Minister’s Office. Netanyahu named Eli Groner, a former economic attaché in Israel’s Washington embassy, businessman and journalist, as PMO director-general. Yoav Horowitz, the former head of Avis Israel who represented him in coalition talks, becomes chief of staff. Netanyahu, who is also foreign minister, also appointed veteran diplomat, international and Middle East expert and former Israeli U.N. ambassador Dore Gold as director-general of the Foreign Ministry.

Erdan Changes his Mind

Likud Knesset Member Gilad Erdan in late May reversed his earlier decision to stay out of Prime Minister Netanyahu’s government and was sworn as public security, strategic affairs, and public diplomacy minister. Erdan initially refused a ministerial appointment after being denied the Foreign Ministry by Netanyahu, who is holding that key post in “escrow” the hope giving to either Labor party MK Yitzhak Herzog or Netanyahu’s ex-ally and former foreign minister Avigdor Lieberman of Yisrael Beitenu if they join the government. The deal, however, caused ripples inside the PM’s Likud party: Absorption Minister Ze’ev Elkin, a party stalwart who was pushed out of Strategic Affairs to make room for Erdan, told Haaretz: “How would you think a minister that was fired would act?” Elkin told Haaretz. “I will act like a minister who’s been fired.” And Benny Begin, the son of Likud founding father Menachem Begin, was forced to give up his minister without portfolio position to enable Likud not to exceed its quota of 12 ministers.

Yitzhaki Named

Avigdor Yitzhaki, former director-general of the Prime Minister’s Office and a close adviser to the late Ariel Sharon, has been named head of the housing division at the Finance Ministry. Appointed by Finance Minister Moshe Kahlon, Yitzhaki will oversee Kahlon’s plan to lower housing prices.

The Economy

Gas Dispute

Consumers, politicians, bureaucrats, the government and drillers are entangled in a dispute over the future of the abundant natural gas in Israel’s offshore fields. Legislators and the media are up in arms over what they see as the monopolistic practices of American Noble Energy and Israel’s Delek Group, who have developed Tamar, Leviathan and other fields under the waters of the Mediterranean. The companies insist that the government honor its promise on conditions under which they agreed to look for gas in the first place, raising the specter of complicated litigation that would effectively stop the gas from reaching any market. As for the regulators, Israel’s antitrust commissioner David Gilo recently resigned over government failure to support his decision declaring Noble and Delek, which share control of the Tamar (67%) and Leviathan (85%) a de facto monopoly and to cancel a deal that would let them retain that control in exchange for the sale of two smaller fields, Tanin and Karish, to a third party.

In late June, Energy Minister Yuval Steinitz (a former finance minister) disclosed a compromise outline proposal formulated by an interministerial team including representatives from the Energy Ministry, the Finance Ministry and the National Economic Council of the Prime Minister’s Office. Steinitz calls the plan “the best possible in reality,” emphasizing that continued delays would have “huge” economic repercussions. He noted that development of Leviathan, the largest of the fields with 621 billion cubic meters of estimated reserves which was discovered in 2010, has not yet started.”

If the interests of the Israeli consumer and the Israeli economy are at stake, so is the credibility of Israel to the international business community. The gas companies summed that argument neatly up in a letter from Noble’s legal team, published in Globes in early July, which said in that Noble been invited to invest in Israel. “Israel was happy, it seems, for Noble Energy to risk its money in Israel, as long as it was unsuccessful. There is a monopoly – that’s not a crime.” the letter said. “The company agreed to invest its money where other companies refused (and we won’t apologize for that); the supply of gas from Egypt ended in 2011 (and that was not our fault); other companies with no experience found no gas (again, that was not our fault); and the incessant interference by regulators with no background in oil and gas drove every gas company away, except for Noble Energy.”

Steinitz’s plan has not yet been presented to the government for approval – or, eventually, for the Knesset. When it does, Finance Minister Moshe Kahlon won’t be participating in the discussions, saying his friendship with Koby Maimon, who has a financial interest in one of the fields. Further delays are also in the works, after State Comptroller Joseph Shapiro requested government consideration be delayed until he presents his own report on the dispute.

Orange Adieu

French telecom giant Orange and Partner, the Israeli cell provider, which markets under the Orange brand, have agreed on a mutual option to end their relationship within two years. Under the agreement, Orange will pay partner up to Euro90M, among other things to aid Partner in rebranding.

The announcement came almost a month after Orange CEO Stephane Richard told a Cairo meeting that he would pull the French telecom giant out of Israel “tomorrow” if he could, sparking a firestorm of criticism from Israeli and French officials. Richard subsequently claimed he was misquoted, and flew to Israel to apologize after Prime Minister Netanyhau, who is acting as foreign minister, instructed the Israeli ambassador to France not to accept his apology in Paris. In Jerusalem, Richard reportedly told the prime minister that he did not support boycotting Israel, admired the country and would invest in it in the future.

Competition Committee

A committee named by Finance Minister Moshe Kahlon and Bank of Israel Governor Karnit Flug to increase competition in the banking and financial services sector is expected to present recommendations in early September. In naming the panel, Kahlon and Flug said that the high centralization of Israeli financial services can be hurtful especially to households and small businesses. In a separate statement, Kahlon said that “a situation in which three banks control more than 70% of the branch is not logical.” The committee is headed by Dror Strum, director-general of the Israeli Institute for Economic Planning.

Mixed Reviews from IMF

The International Monetary Fund has welcomed Finance Minister Moshe Kahlon’s plan to boost competition, continued GDP growth and increased participation in the workforce (up from 59% in 2007 to the current 68%). On the other hand, it is sharply critical of how fiscal policy is monitored. In a report issued in early June, it said, “If we use international accounting standards and include the inflation compensation of indexed bonds above instead of below the line as is currently done, the deficit is almost 1 percent higher than the 2½-3 percent reported in Israel… In theory, Israel has an expenditure rule and a deficit rule underpinned by a debt target, but they have been revised so often that in practice there is no effective fiscal anchor.” IMF calls Israel’s fiscal deficit “high, structural, and persistent” and calls for reduction of at least 0.5% in the 2016 budget.

OECD Prediction

Israeli economic growth is expected to reach 3.5% in both 2015 and 2016, according to a new Organization for Economic Cooperation and Development (OECD) projection. OECD economists said that low oil prices, combined with interest rate cuts and the increase in the minimum wage, were likely to boost domestic demand, and that gradual improvement in the global economy is likely to increase Israel’s exports.

Growth Figure Revised

Israel’s Central Bureau of Statistics has revised its growth figure for the first quarter of 2015, downsizing the statistic from 2.5% annualized to 2.1%. The figure stands in sharp contrast to the last quarter of 2014, when annualized growth amounted to 6.5%.

Budgeting Delayed

Knesset Speaker Yuli Edelstein has scheduled the much-delayed final reading of the combined 2015-16 budget for November 20. Approval of the 2015 budget, technically due before the end of 2014, was postponed when the previous government was dissolved and delayed again as the new government was formed after the March elections and the Knesset’s summer recess. In the interim, government agencies and ministries are operating on monthly funding based on 1/12th of the 2014 budget.

Google’s Love

Google’s development centers in Israel are among the company’s most efficient and Google is constantly expanding them, the Internet giant’s chairman Eric Schmidt said at an early-June conference in Tel Aviv. “We love Israel,” he said, adding that the quality of Israeli engineers is very high, not least due to the country’s universities and training acquired in the army. He praised local salespeople as among the best in the world, saying they continue to contribute to the company’s profits.

Directions from the Terminator

Arnold Schwarzenegger, the film star and former California governor, is becoming the voice of Waze. Google, which acquired the Israeli traffic application for about $1B, reached an agreement with Paramount Studios, which is due to release Schwarzenegger’s new Terminator film. In addition to mundane directions such as “turn left in 400 meters” and the like, Schwarzenegger will say “hasta la vista baby” when reaching the destination.

Much Ado about Little

European Union moves to require labeling products from West Bank settlements will have little effect on Israel’s exports, according to a report in Haaretz. which estimates that industrial exports from the West Bank, Golan Heights and East Jerusalem to the European Union totaled $100M, accounting for less than 0.5% of Israel’s total industrial exports to this huge trade bloc (excluding diamonds). Industrial exports from the West Bank, Golan Heights and East Jerusalem to the entire world totaled $250M that year. In addition, most of the West Bank settlement exports are components like pipes and machine parts, which in any case do not appear on supermarket shelves. Agricultural products, which do make their way to supermarkets, amount to only a few million dollars, according to the report.

India Exports Double

Israeli exports to India totaled $370M in the first quarter of 2015, double the total for the corresponding quarter of 2014, according to the Israel Export and International Cooperation Institute. Exports rose in all sectors, including telecommunications equipment, measuring and control equipment and industrial equipment. At the same time, exports to China fell to $606M, a 15% decline.

Total first quarter exports, at $12.5B, declined marginally from 2014’s $12.6B. Israeli exports to the U.S. were up 13% to $2.9B, while Russia exports plunged 27% largely due to a decline in the sale of agricultural products and weakness of the ruble.

Explosive-Sniffing Mice!

X-Test, an Israeli company, has proposed utilizing explosive-sniffing mice to aid airport security. According to a report in Britain’s the Independent, X-Test CEO Yuval Amsterdam, raised the possibility at a recent security conference in London. He said the mice, which can be trained as bio-sensors, would be kept in cages, are “cheap and you don’t have to take them for a walk.”

Ministry D-G

Housing and Construction Minister Yoav Galant has appointed Eshel Armoni, a former Mossad official who served in the IDF’s Shayetet 13 (Flotilla 13) elite naval commando unit, as director general of the ministry.

TAHAL Gets India Project

Israel’s Tahal Consulting Engineers, owned by Kardan NV, has won a $67M contract to design, build and operate a water supply system providing potable water to 331,000 people in 131 villages in the state of Karnataka. The project involves design and construction of a water intake system, a transmission pipeline, a 600-km distribution network, a water treatment plant and eight reservoirs.

Growin’ in the Wind

Energix, an Israeli renewable energy specialist headquartered in Ramat Gan near Tel Aviv, is acquiring a bankrupt family company that owns a wind energy project in the Golan Heights. Price of the project, after approval by creditors and company shareholders, is NIS 30M. The project, on the Tel Asania ridge in the northern Golan, is the only place in Israel where electricity is produced from wind power. Built in the 1990s, it has a limited capacity of only a few megawatts. Energix is expected to make additional investments to reach 15-megawatt capacity and attach its output to the national power grid.

Finance & Investment

Takeover Triangle

Israel’s Teva Pharmaceuticals is deep in a triangular high-stakes takeover battle involving Britain’s multinational Mylan, a rival in Teva’s main business of producing generic drugs, and Perrigo, an Irish-American drug company which acquired Israeli drug firm Agis a decade ago.

Mylan is attempting to take over Perrigo in a hostile takeover that would be worth over $34B. At the same time, Teva seeks to take over Mylan in an even larger deal, of over $40B, which is opposed by the Mylan board. Completion of the Teva-Mylan deal is conditional on the Mylan-Perrigo deal not going ahead.

In the three months since Mylan’s first offer for Perrigo, Mylan has twice revised its bid (and twice received a negative response from Perrigo); letters full of pique and emotion have been exchanged between the chairman of Mylan and the CEO of Teva; and Teva has purchased Mylan shares worth over $1.2B on the open market. According to a Reuters report, Teva aims to accumulate additional Mylan shares, enough to allow it to take its challenge to the courts.

John Sheehan, Mylan’s chief financial officer, visited Israel in late June and met Perrigo shareholders, including the Menorah and Migdal insurance companies.

Entering Bond Market

Five North American property companies are gearing up to make first-time bond offerings in Israel totaling a combined $400M, according to a report in The Marker. They are Copperline Partners, Strawberry Fields, Urban Corporation, Witkoff Group and Marx Development Group. Witkoff, whose properties include New York’s Park Lane Hotel, had planned to sell bonds last summer. Copperline builds and rents luxury apartments in New York and Florida, Strawberry Fields and Urban Corp are Canadian.

Daily Mail Investment

DailyMail.com has invested $3M in Taboola, an Israeli content recommendation company. Publishers use Taboola and Outbrain, another Israeli company to help readers find more stories they might like to read through links, often at the bottom of a web page.

Chinese Interest

Chinese investors will invest an estimated half a billion dollars in Israeli venture capital in 2015, according to the IVC research center. Since 2012, more than 30 new investors from China and Hong Kong invested in Israel.

Potash Sales

Israel Chemicals says it has new contracts to sell 850,000 tons of potash to existing customers in India $275M. ICL, the world’s sixth largest potash extractor, is controlled by the Israel Corporation. A producer of potash, chemicals, phosphates, and fertilizers mainly for the food, agricultural, and chemical compounds markets, it recently settled a strike by workers at its subsidiaries Dead Sea Works and Bromine Compounds subsidiaries. ICL recently said that shareholders of Alana, a Canadian competitor, approved ICL’s $137M takeover bid.

Endochoice IPO

EndoChoice Holdings, an Israeli-American firm specializing in advanced gastroenterology medical equipment, raise $96M at a value of $366M in an early-June initial public offering on the New York Stock Exchange. One of the major beneficiaries of the deal was Accelmed, owned by Israeli entrepreneurs Mori Arkin and Uri Geiger, whose 9% stake in EndoChoice jumped to a value of $37.5M (from a $14M investment). Accelmed’s business model is merging innovative Israeli technology into companies with no major growth engine; in EndoChoice’s case, that was bringing in Peer Medical, developer of an advanced colonoscopy technology that has become the company’s main profit center, in 2013.

Buffett Invests Again

American megainvestor Warren Buffett’s Berkshire Hathaway and GE Ventures have invested $22.5M in eVolution Networks, a Ramat Gan and New York-based developer of energy-savings solutions for the operators of mobile networks. eVolution’s software-based solution that analyzes the mobile network’s traffic needs and adjusts the use of the network’s resources based on real-time demand from subscribers to manage network resources reportedly has saved millions of dollars in energy bills for Tier-1 operators like the Spanish multinational Telefonica Group.

eVolution is Buffett’s fourth venture into Israel. After initially putting up a total of $6B to purchase blades maker Iscar in 2006, he purchased 60% of Agro Logic and Ray-Qa interconnect.

Mergers & Acquisitions

Fosun-Phoenix Insurance

Fosun, the Chinese investment giant, has acquired control of Israel’s Phoenix Insurance from Yitzhak Tshuva’s Delek Group, based on a valuation of NIS 3.45B (about $900M). The deal had been pending for some time; its completion was delayed by Fosun’s demand for an indemnity from Delek Group against the outcome of an investigation currently under way by the Israel Securities Authority into the Excellence Investment house, which is controlled by Phoenix.

Citycon-Sektor Gruppen

Citycon Oyj, a unit of Haim Katzman’s Gazit-Globe Group, has purchased Norwegian shopping-center owner Sektor Gruppen for about Euro1.5B ($1.65B). Sektor Gruppen owns or holds majority stakes in 20 Norwegian shopping centers, mostly in Oslo, Bergen and Stavanger. The purchase makes Tel Aviv-based Gazit-Globe the largest listed retail owner in the Nordic region and the third-biggest in Europe by gross assets. Gazit-Globe manages more than $21B of assets with more than 70 million square feet of leasable area.

In a deal between two Israeli companies Elbit Systems, Israel’s largest private defense contractor, has purchased NICE’s Cyber and Intelligence division for up to $157.9M. NICE’s Cyber and Intelligence division offers solutions, which provide law enforcement agencies and intelligence organizations with tools for creating communication intelligence. The division’s yearly revenue in 2014 was in the high tens of millions of dollars. Elbit plans to integrate its new purchase into its Cyberbit, as part of an effort to become a world leader in cyber and intelligence technology.

Facebook-Face.com

Internet giant Facebook has acquired Face.com, an Israeli developer of face-recognition technology, for an estimated $70-$80M. Based in Tel Aviv, Face.com has already developed and released two Facebook applications, Photo Finder and Photo Tagger.

Market Tech – Stucco Media

Market Tech, owned by Israeli billionaire Teddy Sagi, has acquired Tel Aviv-based e-commerce platform developer Stucco Media, for $43M. Stucco Media’s founders, Guy Weis and Itay Yitzhaki, both did their military service in IDF technology units. The deal came shortly after Cyprus-based Playtech, also controlled by Sagi, purchased another Israeli firm — online securities trading-technology company Plus500 for £460M. Playtech also acquired Ava Trade for a reported $105M. Ava Trade, a contract-for-difference foreign trade broker, handles a monthly volume of 2 million transactions and $60B.

Johnson Matthey – Stepac

StePac, an Israeli developer of special packaging that extends the shelf life of agricultural products, has been sold to Johnson Matthey Investments for £18M. StePac, based in Tefen in northern Israel, was founded in 1992 by entrepreneur Israel Ben-Tzur, and developed its products on the basis of technology from the Volcani Institute, an Israeli agricultural research facility, and its own technology. Both the buyer and seller DS Smith, which had acquired all of StePac from its original owners, are British companies listed on the London Stock Exchange.

Frutaron – Taura

Frutarom Industries, the Israeli multinational producer of flavor and fragrance company, has purchased Taura Natural Ingredients of Australia for $70M. It is the Israeli company’s seventh acquisition of 2015, following companies in Spain, Britain, Slovenia, Belgium, India and Canada.

Insight – Chackmarx

Insight Venture Partners, a U.S. private equity firm, is acquiring Checkmarx, an information technology security firm based in Tel Aviv and Greenwood Village, Colorado, for an estimated $100M. Deloitt Technology Fast50 Israel ranked Checkmarx as Israel’s eighth fastest growing technology company’s in 2013, based on 2,200% growth over the preceding five years.

XIO-Lumenis

China’s XIO investment fund has acquired Lumenis, an Israeli developer of medical lasers for surgical, opthamological and aesthetic applications, for $510M. Based in Yokne’am near Haifa, Lumenis went public in the United States a little over a year ago.

HP-ConteXtream

HP has acquired ConteXtream, an Israeli specialist in network functions visualization (NFV) with headquarters in Mountain View, California. Purchase price is estimated at around $24M. HP, which describes NFV as “one of the most significant developments in the communications industry, plans to integrate the newly acquired company into its Communications, Media and Entertainment Solutions division.

Arm-Sansa Deal Near

ARM, the British chipmaking giant, is in advanced negotiations to purchase Sansa Security for an estimated $75-$85M. Sansa (formerly Discretiz Technologies), is located in Kfar Netter north of Tel Aviv, is a developer of security solutions for cellular devices and flash memory. The two companies worked together on various project, including Samsung’s Galaxy S3 flagship mobile device.

AMI-Zap Group

Shareholders of the Zap Group have approved a NIS 145M purchase of the consumer digital information group by AMI of the Apax Partners private equity firm. AMI was founded by Zehavit Cohen, who heads Apax Israel. Petah Tikva-based Zap, founded in the late 1960s as Golden Pages, deals in digital consumerism and advertising on over 20 digital platforms (websites, mobile apps and more) in a broad range of domains.

FIMI-Hadera Paper

FIMI Opportunity Funds has purchased 59% of Hadera Paper from Clal Industries for NIS 354M (slightly over $900M). The transaction between FIMI, owned by Yishai Davidi, and Clal Industries, owned by Len Blavatnik, must be approved by both Israel’s Antitrust Authority and the Ministry of Energy and Infrastructure. Founded in 1951, Hadera Paper manufactures and sells paper for printing and packing and processes waste paper and plastic. Its plant is in Hadera, about halfway between Tel Aviv and Haifa.

According to a report in Globes, FIMI is also negotiating the purchase of Oxygen and Argon Works, Israel’s largest manufacturer of industrial gases, for NIS180M.
Meanwhile, Yediot Aharonot has reported that FIMI is negotiating with an Indian purchaser for the sale of John Deere Water for $180M.

Sichuan Hebang – Stockton

Sichuan Hebang of China is acquiring 51% of the shares of Stockton, a private Israeli agrichemical firm based in Petah Tikva, outside Tel Aviv. It is the first investment outside of China for Sichuan Hebang, which is listed on the Shanghai Stock Exchange at a $3.6B market cap. Purchase price of $90M represents a $177M company value for Stockon, whose environmentally friendly vegetable extract-based pesticide, Timorex Gold, is sold in 20 countries, where it is used on crops, including rice, coffee, tomatoes and bananas. The product was recently licensed for sale in the U.S.

Emerson Electric – Spectronix

Israeli company Spectronix Ltd.,which develops systems for detecting and containing explosions on military vehicles and fire and gas-detection civilian systems, is being sold to Emerson Electric for $99M.

Science & High Technology

Fruit Fly Export

BioBee Biological Systems, based in Kibbutz Sde Eliyahu, is exporting sterilized fruit flies to protect orchards in the Balkans. The flies, sterilized by radiation in cooperation with the Vienna-based Atomic Energy Commission in a deal valued at about NIS 1M, will be released along the Bosnian-Croatian border to mate with local female flies, leading to a significant drop in the area’s fruit fly population.

Teva in Microchip Deal

Teva Pharmaceuticals, based in Jerusalem and Petah Tikva, and Microchips Biotech have entered a partnership aimed at exploring ways to integrate Microchips Biotech’s implantable drug delivery device to Teva’s portfolio of products. The electronic device developed by Microchips, of Lexington, Massachusetts, consists of microchip arrays capable of storing hundreds of therapeutic doses of drug for periods ranging from months to years and release each dose at a precise time. The device can be programmed to release drug on a predetermined schedule and will have wireless control features. The partnership agreement includes a $35M Teva investment in Microchips.

AVG Opening Center

Amsterdam-based security software maker AVG Technologies NV plans to open a research and development center in Tel Aviv. The Global Center of Excellence, with more than 120 employees, will focus on emerging mobile threats. AVG Anti-Virus, the company’s most popular mobile product, was driven by the acquisition of Israeli start-up DroidSecurity in 2010.

Tech Authority

The Israeli government has approved the establishment of a National Authority for Technology and Innovation (NATI), operating in the Office of the Chief Scientist at the Economy Ministry. Goals of the new authority would include: encouraging growth of industrial companies, technological innovation in fields, which are not traditionally R&D-dependent, strengthening research infrastructure and increasing participation of sectors currently underrepresented in the hi-tech work force.

Cyber Cooperation

Fraunhofer SIT, a Darmstadt-based leading German research institute, and leading Israeli institutions are working together on ways to improving security in a number of key cyber security fields: the Internet, Critical Infrastructures, Cyberphysical Systems, Cloud Computing, Big Data and Business Software. Key players participated in a late June held a joint workshop in Tel Aviv.

Defense & Aerospace

German Ship Deal

Israel will purchase four ships from Germany to protect its offshore gas fields. The purchase agreement, valued at NIS 1.8B, was signed in early May by Defense Minister Moshe Ya’alon and his German counterpart, Ursula von der Leyen. The German government will finance about a third of the contract, which calls for delivery of the first vessel within five years. The new ships will be larger than the Sa’ar 5 class corvettes currently in Israel Navy service.

Applications Up

DECA, the Defense Ministry’s Defense Exports Controls Agency, received applications for 48,000 licenses to market defense equipment, systems and products to 190 countries in 2014 — up 70% from 2013. According to DECA, Israel has 1,303 registered exporters holding 184,000 licenses for marketing goods. In 2014, 7,600 licenses – the final approvals required for the actual export of the defense systems – to 130 countries.

David’s Sling Trainees

The Israel Air Force has begun training crews to operate the David’s Sling defense system designed to intercept and destroy mid-range missiles. David’s Sling, also known as Magic Wand, is expected to be operational this year. It was developed by government-owned Rafael Advanced Defense Systems and Raytheon, the U.S. defense contractor, to deal with rockets and missiles fired from a range of100-300 kilometers (62-186 miles), a pivotal distance that includes most of Hezbollah’s strategic weapons arsenal.

Israel currently has two operational systems: Iron Dome, also developed by Rafael, has proved effective against short-range threats, with an interception rate of roughly 85 percent during two campaigns against Hamas; and the Arrow 2, jointly developed with the U.S., designed to address long-range ballistic threats which has not yet seen action in real time.

Helmet Safety

Elbit Systems has introduced Canary, a new safety device fitted into the helmet of aircraft pilots. The integrated physiological monitoring device is designed to provide real-time alerts in life-threatening in-flight situations. In extreme cases, such as hypoxia or loss of consciousness, a warning will appear, either as an audio-visual alert on the pilot’s Helmet Mounted Display (HMD) or via the aircraft’s mission computer using the HMD interfaces. The alert will allow the pilot to react before losing consciousness or engage the autopilot. Canary uses sensors developed by Life Beam, an Israeli start-up, with support from the Defense Ministry.

Elbit’s first quarter revenues rose by 3.5% compared to the parallel quarter of 2014 to $706.6M, but were down from the $850M registered in the fourth quarter of last year. Elbit’s order backlog, much of which is attributable to foreign sales, rose to $6.27B, compared to $6.06B at the end of March 2014.

New IAI Radar

Israel Aerospace Industries (IAI) has unveiled a unique, highly advanced family of modular Ultra High Frequency (UHF) Active Electronically Scanned Array (AESA) Radars. The new family of AESA UHF radar was developed by IAI’s Elta Systems; it provides early-warning and long-range search/tracking capability of air-breathing targets and ballistic missiles.

Israeli-Russian Cooperation

Elbit Systems, Israel’s largest private defense contractor, and Kret of Russia are cooperating in development of onboard electronic systems for Russia’s all-new MS-21 (Yak-242) medium-range aircraft. Kret reported that Elbit will supply the computer module component of the MS021’s heads-up display package to the Ulyanovsk Instrument Making Bureau.

Israel at Le Bourget

Elbit Systems presented a number of next-generation systems at the 51st Paris Air Show at Le Bourget. They included BrightNite, which enables utility helicopters undertake night missions, providing them with piloting capabilities of attack helicopters; Skylark I-LEX, a new generation of the legacy Skylark I-LE mini-UAS, man-portable electric propelled “beyond the next hill” missions; and Air Keeper EW & SIGINT Solution for Aircraft, a highly advanced solution that provides two significantly critical capabilities in one: intelligence gathering and EW defensive capacities onboard the same platform.

IAI offerings at Le Bourget included HAROP loitering munitions systems, an improved Super Heron UAV, Lora long-range surface-to-surface missiles and the Gulfstream G550 early warning and command and control platform. Aeronautics Defense Systems, based in Yavne south of Tel Aviv, showed its Orbiter 3 Small Tactical Unmanned Aerial System — a compact and lightweight system for military and homeland security missions designed for field deployment, launched from a catapult and recovered vertically by opening a parachute and an airbag. Ashot Ashkelon, an Israel Military Industries subsidiary, and Efesto of Italy jointly developed an electric motor for UAVs that activates in case of main engine failure. Rafael introduced Derby ER, an enhanced version of its Derby air-to-air missile system, which has an extended range of up to 100 km due to new solid-state technology in the guidance system, which enables allocation of additional room for the propulsion system.

HAPOR Demo

IAI recently completed a successful demonstration of its HAROP loitering munitions system for a foreign customer. The system utilizes transportable launchers to dispatch munitions capable of remaining aloft in the area of potential targets for up to six hours, until a target is identified and an attack is launched.

Detecting Volcanic Ash

Elbit Systems has won a European R&D grant for a system that will detect volcanic ash capable of disrupting flights, according to a report in the Aviation Week magazine. The defense contractor, in cooperation with the European Commission’s Eurostars program, will integrate an ash-detection system developed by Nicarnica Aviation of Norway into its latest enhanced-visions systems. The project also has the backing of the Israeli Office of the Chief Scientist and the Norwegian Research Council.

Volcanic ash poses multiple threats to aircraft. Aviation Week reported that it is abrasive to windscreens and “can melt within the core of an engine, coating turbine blades and vanes and causing a surge, loss of thrust or flameout.”

HERON Upgrade

IAI is upgrading the capabilities of its Heron UAVs with long-range persistent surveillance options and area dominance capabilities by integrating it with its high definition M-19HD EO payload, developed and produced by IAI’s Tamam Division. The M-19HD has successfully completed flight tests onboard manned and unmanned platforms, including the Heron 1 UAS.

Ya’ari Resigns

Yedidia Ya’ari, who headed Rafael for 11 years, resigned in late May. The resignation of Ya’ari, a retired Israel Navy vice-admiral, reportedly was due to a series of longstanding disputes with the Defense Ministry. According to press reports, these included a security breach by a Rafael employee and the government-owned firm’s delay in reporting the problem, unlicensed marketing to an unnamed Central Asian country, and a dispute with ministry director-general Dan Harel over Ya’ari’s statements at a recent defense exhibition in Singapore.

Airbus Eyes Sikorsky

Airbus Helicopters is considering the possibility of acquiring Sikorsky, after United Technologies announced in early June that it planned to sell off the major U.S. defense contractor and manufacturer of Black Hawk helicopters.

Air Force Agreement with U.S.

Israel and the U.S. have signed a strategic Air Senior National Representative air force agreement. According to the Israel Air Force, the pact covers a full range of cooperation between the forces under one roof by building a joint annual work plan addressing these issues with the goal of promoting relevant interests of each force. Brig.-Gen. Ya’akov Sharabani, the IAF’s Washington attaché, called the pact “a significant milestone in the cooperation between the forces, realized for the first time as signed agreement.”

In the India Running

A subsidiary of Elbit Systems is one of two companies still in the competition for a $2.35B Indian towed artillery gun tender. The competitors are Kalyani Strategic Systems Ltd (KSSL) and L&T. Field trials for the 155-mm/52 caliber gun are nearing completion and the winner of the order is expected to be declared over the next few months. The contract involves the supply of 1,500 towed artillery guns for the Indian Army, including 1,100 that must be produced under the “Make-in-India” initiative.

Innovative Robot

The Partner, a versatile, one-armed robot that moves like a human, was one of the starts of Mahanet Tech-Shop, a show of innovative products sponsored by the Israel Defense Forces. According to the Israel Defense website the robot, which uses a combination of sophisticated electronics and recycled parts like an old curtain rod and wheels from a toy tractor, was developed by an Israel Navy sergeant-major and his friends in their spare time. Possible applications for the robot include rescue in hard-to-reach locations and toxic environments.

The government has pledged NIS 1.5B to help IMI’s new owners transfer the company’s plants and facilities from central Israel to the Negev.

Killer UAV

Aeronautics, the maker of unmanned aerial vehicles based in Yavne, south of Tel Aviv, is in the final stages of developing its K1 UAV, designed to conduct surgical strikes on vehicles or terror targets. A prototype of was displayed at the recent Le Bourget Air Show in Paris. About the size of a bird of prey and weighing only 2.5 kg, the K1 can remain airborne for two to two-and-a-half hours. Aeronautics, which says the K1’s controls are very simple, added that the UAV is “unobservable and invulnerable, much cheaper than missiles designed for identical missions, and its cost could reach up a few tens of thousands of dollars per unit.”

Rafael Wins Cyber Tender

Rafael Advanced Defense Systems is the leader of the winning bidder to provide information technology and other advanced services for Israel’s new unit for fighting cyber threats. Others in the group include EMC and Cisco and Matrix of Israel. The National Cyber Authority is being set up to help Israeli companies and government bodies to identify and cope with cyber attacks.

Benelux Deal

Elbit Systems has been awarded a $150M, five-year contract from the Dutch Ministry of Defense to supply advanced Smart Vest systems for the infantry soldiers in the Benelux countries – Netherlands, Belgium and Luxembourg. Thales Netherlands B.V (“Thales”) will be its main sub-contractor. Smart Vest is a collaboration between the soldier modernization programs of the Benelux countries and their first strategic joint program.